Air India’s privatisation looms: think-tank

State-owned national carrier Air India’s (AI) return to profitability is ruled out and privatisation is now a certainty, a report by aviation consultancy firm Centre for Asia Pacific Aviation (Capa) said.

Last week, aviation minister Ajit Singh had said that if there was political consensus, government may look at privatising AI.

“Despite the fact that AI’s performance has improved significantly, we rule out the possibility of AI’s return to profitability under its current ownership structure. With the carrier expected to post continued losses, we expected that the next government which takes office in 2014 will finally bite the bullet and commence the privatisation of AI,” the report said.

India’s international traffic, it said, was expected to approach 50 million passengers by the end of financial year 2013-14. Capa said the five-year-20 aircraft rule for Indian carriers to fly abroad was one of the “most damaging and discriminatory regulations” in India.

Abolition of this regulation is clearly in India’s national interest, it said.

“The implications could be far-reaching. GoAir, the only incumbent carrier which does not yet qualify for international services would be permitted to go abroad, but perhaps more significantly so too would the two new ventures announced this year, AirAsia India and Tata-SIA, as well as other startups. Both carriers have made clear their interest in launching international services.”